Bob Company reported sales of $200,000, an increase in accounts receivable of $15,000, and a decrease in cash of $20,000.____ was received from Bob Company's customers.
A)$195,000
B)$185,000
C)$200,000
D)$220,000

Question

Quizplus · Accepted Answer

The increase in accounts receivable means that Bob Company's customers have bought goods on credit and not paid for them during this time period, so this $15,000 is not included in the cash received from customers. The decrease in cash means that Bob Company has paid out $20,000 during this time period, which is not included in the sales figure. Therefore, the cash received from customers is sales minus the increase in accounts receivable and minus the decrease in cash, which is $200,000 - $15,000 - $20,000 = $165,000. However, the question asks for the amount received from Bob Company's customers, so we need to add back the decrease in cash, which was not received from customers. Therefore, the final answer is $165,000 + $20,000 = $185,000.

Bob Company Reported Sales of $200,000, an Increase in Accounts